Developers are using more federal historic rehabilitation tax credits than ever before, even though many historic buildings in prime locations have already been restored, according to a joint study of the program by Rutgers University and the National Trust for Historic Preservation.

“I don’t see the trend ending for rehabbing historic buildings,” said Corinne Ingrassia, an analyst for the Trust.

There is still a large supply of antique buildings in secondary markets, in addition to many younger buildings that have historic significance and also deserve to be preserved, she said.

Developers used federal tax credits to do $7 billion worth of work on historic rehabilitation projects during the five quarters ending Dec. 31, 2005, according to the study. That’s up from $6.5 billion during the previous five quarters.

Rising construction costs are just one reason the amount of money spent on historic buildings that use tax credits has grown. At the same time, the size of historic restoration projects is increasing as developers take on bigger and bigger sites.

Missouri snagged more dollars for historic rehabilitation than any other state during the study period. It had $843.43 million in projects approved during the five quarters ending Dec. 31, 2005, according to the report.

To encourage restoration and rehabilitation, Missouri offers a state tax credit to historic restoration projects, in addition to financing the cleanup of environmental contamination at “brownfields” properties such as old factories.

Pennsylvania, the No. 2 state for historic-rehabilitation tax credits, with $618.51 million, doesn’t offer state tax credits for restoring historic buildings.

Still, it has a strong historic preservation office that educates developers about what subsidies are available and helps them get qualified projects placed on the historic register.

“The state historic preservation officers are key in the applications process,” Ingrassia said.

Both Missouri and Pennsylvania also still have relatively large supplies of abandoned or underutilized older buildings, and both states are working hard to put these properties into private hands for redevelopment.

California is also a top state, with $278.98 million in historic preservation activity. But the Golden State offers relatively little encouragement to historic restoration projects.

“There are opportunities being lost in California,” Ingrassia said.

California might not seem to be a promising place for historic rehabilitation, since much of the state was built up after World War II.

However, a project doesn’t have to be more than fifty years old to win historic restoration tax credits. It only needs to be a certified historic structure – that is, on the National Register of Historic Places or contributing to a registered historic district.

Ingrassia believes that younger historic buildings may provide the sites for many historical rehabilitation tax credit projects in the future.

“You’ll see a new generation of the recent past preservation,” she said.

The federal historic rehabilitation tax credit provides a federal income tax credit equal to 20% of the cost of rehabilitating a historic building for commercial use.